Bitcoin Is The New Meme Machine

Healthy money like Bitcoin facilitates rational memes that are amplified by criticism, while fiat creates memes that discourage criticism.

This article was originally published by Logan Chipkin at bitcoinmagazine.com

Money doesn’t make the world go round. Idea can.

In “Fiat Standards,” economist Dr. Saifedean Ammous explains how our shift from hard-money standards to fiat standards has led to distortions in nearly every fundamental sector of the modern world: education, nutrition, energy, science, and medicine, to name a few. A number of.

As Ammous wrote:

“…[Fiat] sever the relationship between work and rewards. Instead of a marketplace that offers individuals rewards for their work as appreciated by others they serve, fiat money makes monetary rewards highly dependent on political compliance and connections. Instead of learning to be productive, fiat teaches you to play politics. Instead of work being rewarded based on its productivity, it’s rewarded based on an artificial status game.

But fiat is more dangerous to progress than Ammous’ disastrous explanation. What people choose to do, what problems they choose to tackle and what solutions they want to create, are based on them ideas.

Few ideas thrive on criticism: in science, it is a theory that has passed rigorous testing and debate. In the marketplace, it’s the idea behind a product that makes a profit. In culture, they are patterns of behavior that have survived moral, aesthetic, and political criticism. Following the physicist David Deutsch, we can name the ideas propagated by surviving criticism rational memes.

For civilization to progress, we usually need to create as much wealth as possible, as quickly as possible. To end world hunger, we need the wealth needed to build systems of mass food production. To become an interplanetary species, we need the wealth needed to build cost-effective transportation systems as well as the technology needed to survive and thrive on other planets. Etc.

The more our culture is dominated by rational memes, the better our ability to create wealth will be. The more we are able to discard ideas that fail to withstand criticism, the more our actions will be based on ideas that align with reality.

Unfortunately, some ideas spread push criticism, not by surviving it. And this is where the fiat standard rears its ugliest head.

Consider how diversity, equity and inclusion (DEI) mandates spread. DEI supporters intimidate dissidents into silence, all too ready to demonize opponents as “racist” and “sexist”. Across universities, corporate America, and the media, the fear of ostracism and vilification is taking its toll on those who disagree with DEI’s prescriptions. So DEI rarely has to answer alone. Instead, it charged forward, neutralizing all would-be critics in its path.

Market feedback is also a form of criticism. At hard-money standards, DEI-driven companies and universities will compete with meritocracy-driven alternatives. Market competition has a ruthless way of inciting waste and error. Spending capital on semi-religious sessions and recruiting practices that meet diversity quotas is a costly mistake. On hard-money standards, such a company would soon lose out to one whose sole agenda is to produce what consumers most want at the lowest possible price.

But we don’t live in a world of hard money. Fiat standards allow DEIs, collections of ideas that don’t help companies provide better products, to thrive. In a fiat currency regime, governments and their central banks can suddenly generate cash to subsidize DEI-mandated companies, universities, and non-profit organizations. Thus, the inherent advantages of existing institutions no captured ideologically lost. Neither open discussion nor market feedback are as effective at extinguishing DEI as they are under a harsh monetary regime.

Environmental, social and governance (ESG) mandates follow a logic similar to their DEI parallels. Organizations complying with an ESG mandate must meet a list of criteria that often conflict with their ability to appease the market. They spend valuable time and resources ensuring that they are sufficiently environmentally friendly and have a diverse workforce in no sense. Dissidents of the ESG movement are not being implicated, but instead vilified as “climate deniers” or “selfish”.

Governments and international organizations such as the International Monetary Fund often only fund projects that comply with an ESG mandate. As such, companies will comply with these costly restrictions to gain access to fiat faucets.

Without this easily criminalized fiat money, ESG-compliant companies will be forced to compete with companies whose only motivation is to best satisfy the market. Consumer choice will be a critique of ESG, which will in turn disappear in the face of leaner, more efficient competitors.

DEI and ESG are examples of what is called Deutsch anti-rational memes: ideas spread by hinder critics. Unlike rational memes, anti-rational memes create them harder to create wealth, because they thwart the emergence and spread of new ideas.

It’s important for Bitcoiners (and hard money advocates in general) to acknowledge that there are no guarantees. Anti-rational memes like DEI and ESG can endure as we evolve towards the Bitcoin standard. However, without access to fiat money, they would be far less able to suppress criticism (whether rhetorical arguments or market feedback). Generally:

Fiat standards lower the costs of spreading anti-rational memes and reduce the benefits of spreading rational memesand;

The hard money (Bitcoin) standard increases the costs of spreading anti-rational memes and increases the profits of spreading rational memes.

Ammous is right that fiat regimes encourage institutions to appease politicians rather than solve the problems they were originally designed to solve. But, as I alluded to earlier, the damaging effects of fiat regimes go deeper than that: they give anti-rational memes a chance, of which Ammous’s example is only a small fraction.

To be sure, there are other error-correction mechanisms in society, which is why we are able to make progress despite the tentacles of fiat creeping into ever-more-distant corners of civilization. Also, the cost of spreading anti-rational memes hasn’t diminished zero since fiat replaced gold. Instead, costs have fallen relatively for what it would be under the standard of hard money. The opposite is true for rational memes: their profits do not fall to zero, but are lower than under an honest monetary regime.

Bitcoiners are right when they say Bitcoin will decrease our collective time preferences, create a more honest culture, and strengthen property rights. But a more fundamental consequence of hyperbitcoinization is the subsequent change in the process of spreading ideas. Fiat cheapens suppression of criticism, and therefore stifles progress. Hard money standards align the best ideas in society with the greatest opportunities for profit (whether monetary or psychic).

The world of Bitcoin is one where the arena of ideas is once again egalitarian, where an idea cannot survive relying on subsidies and intimidation tactics, but only on merit. Anti-rational memes will suffer, rational memes will thrive, and we will experience the most open society in history.